Thursday, July 25, 2024

Tight economy causes rapid fall of construction loans in Kenya

By Natasha Gamalie.

The availability of funds from the housing fund levy did not quicken the pace of activities within Kenya’s construction sector in the first three months of the year 2024.

According to the latest KNBS Quarterly Gross Domestic Product Report, construction sector growth slowed down to 0.1% in the three months to March 2024, down from the 3% growth witnessed during a similar period in 2023.

The construction industry has been among those at the forefront in Kenya and contributed 7.1% of the GDP in 2022 alone.

Co-Op post

Loans that were thereafter channelled towards the sector massively decelerated in the first three months of the year, compared to 2023.

The volume of bitumen import decreased from 25,482.6 metric tonnes recorded in Q1 2023 to 17,237.8 metric tonnes in the period under review.

“Cement consumption declined by 12.7% to stand at 1,949.9 thousand metric tonnes from 2,234.2 thousand metric tonnes in the corresponding period of 2023,” KNBS says in the quarterly report.

NCBA

According to KNBS, credit to enterprises in the construction sector went up by 0.6% to stand at Sh. 140.9bn as at March 2024, compared to a 4.8% jump recorded in the same period in 2023.

During the quarter under review, the quantum of iron and steel imports increased to 230,800.6 metric tonnes from 198,925.7 metric tonnes in the corresponding quarter of 2023.

According to KNBS, growth in the construction sector has generally moderated to 3% in 2023 from 5% in the previous year.

NCBA

This was a deceleration reflective of broader challenges to the economy, including fiscal adjustments and fluctuating global commodity prices.

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The report further says that in the first quarter of 2024, Kenya’s economy grew by 5.0%, slightly down from 5.5% in the same quarter of 2023.

It was led by Agriculture, Forestry, and Fishing doing well at 6.1%, real estate going up by 6.6%, the financial and Insurance ecosystem recording a growth of 7%, Information and Communication witnessed 7.8%, and Accommodation & Food Services went up to 28.0%.

Growth momentum for accommodation and food services was initiated during the 2022 recovery from the COVID-19 pandemic.

At the same time, financial and insurance activities accelerated growth from 5.9% in Q1 2023 to 7.0% in the review period.

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